State authorities are moving to suspend and liquidate a newly formed coffee cooperative in Murang’a County after an official investigation linked its leadership to the alleged theft of more than KSh117 million from another farmers’ society and found that its registration process was flawed and possibly fraudulent.
- •An inspection by the State Department for Cooperatives has recommended the immediate suspension of the registration certificate of Marga Farmers’ Cooperative Society, a Mathioya-based entity established in 2024, pending cancellation and liquidation.
- •At the center of the case are individuals who previously served as officials of Kangunu Farmers’ Cooperative Society and were removed from office last year following an inquiry into financial improprieties.
- •The inquiry alleged that KSh117,048,669 was siphoned from Kangunu between 2018 and October 2024.
“From the records and observations, the economic viability of Marga Society limited is uncertain as it is not able to meet its financial obligations. The rush to borrow funds from banks in its first year of operations is enough evidence of the weak viability of the cooperative,” the report stated.
Despite their removal from Kangunu, the same officials later emerged as interim leaders of Marga.
According to the report, Marga’s interim chairman, vice chairperson and secretary were all adversely mentioned in the earlier Kangunu inquiry and surcharged specific amounts linked to the alleged losses. The interim chairman Geoffrey Maina Macharia, who was surcharged Sh7.1 million; interim vice chairperson Stephen Marioko, surcharged Sh108.6 million; and interim secretary Margaret Wairimu Macharia, surcharged Sh989,540.
The report states that these prior findings rendered Marga’s application and bylaws ineligible for registration under cooperative law.
Moreover, the investigation found that Marga was nonetheless registered using documents that were later disputed by individuals whose names appeared in the formation records. Several people listed as having attended the society’s inaugural meeting denied participating in such a meeting, while a former cooperative official cited in the documents disowned the minutes altogether. Investigators concluded that the formation process lacked legal validity.
Beyond registration irregularities, the inspection raised concerns about Marga’s operations. The cooperative was found to be buying coffee cherries in cash through agents operating across Mathioya and Kangema sub-counties, a practice commonly associated with coffee hawking. Regulators view cash cherry buying as undermining cooperative marketing, weakening price discipline, and exposing farmers to exploitation while eroding traceability in the value chain.
In its first year of operation, the co-operative society borrowed funds from banks despite limited trading activity. Inspectors concluded that the borrowing pattern, combined with a lack of documented sales, suggested an inability to meet financial obligations through ordinary cooperative business.
Additional financial concerns emerged from what the report described as soft loans received by Marga from private individuals and a women’s group. The inspection team cited multiple advances totaling nearly KSh2 million, raising questions about governance, disclosure and the exposure of third parties to potential losses should the society be wound up.
Investigators concluded that the cooperative poses a risk to coffee farmers and to the integrity of Murang’a’s structured coffee marketing system. County authorities have acknowledged failures in the registration process and have initiated disciplinary action against officers involved in processing Marga’s registration documents.
The investigation was launched following complaints from officials of several established cooperative societies in Murang’a including Kamacharia, Kangunu, Kiru, New Kahuria, Kanjahi, Kiawanduma, Karuya, Nyakuru, Iyego and New Kiriti.
The inspection team advised county cooperative offices to intensify farmer education and training to reinforce loyalty to compliant societies and improve understanding of cooperative governance.
Officials of Marga Farmers’ Cooperative Society have rejected the allegations, describing them as malicious and intended to undermine a farmer-led investment. The society has indicated it intends to challenge the findings in court.
